THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
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Friday, October 11, 2013

Debt Ceiling Talks Continue

“White House Press Secretary Jay Carney says Obama and
House Speaker John Boehner spoke by phone Friday, after officials said House
Republicans offered to pass legislation to avert a default and end the 11-day
government shutdown.

Their proposal to end the stalemate would include cuts in
benefit programs and changes to Obama's health care law….Carney…reiterated that
Obama believes the debt ceiling should be lifted without ties to budget
negotiations…Obama held discussions with Senate Republicans at the White House
Friday morning.

Meanwhile, officials say House Republicans are offering
to pass legislation to avert a default and end the partial government shutdown
as part of a package that includes cuts in benefit programs.”Story and video at…

On its surface, the above story doesn’t look much
change.In the end though, the
Republicans will have to pass a “clean” bill to increase the debt at least for
the next 6-weeks.Obama will have to
negotiate on some Republican demands, most likely related to debt reduction.It does look like Obamacare is no longer the
main thrust of House Republicans. That
was plain in Ryan’s piece in the Wall Street Journal where he called for
spending cuts; reform the tax code; modest reforms to entitlements and other
proposals.Here’s Ryan’s WSJ piece: “PAUL
RYAN: HERE’S HOW WE CAN END THIS STALEMATE” at

“…Republicans are indeed kidding themselves if they
believe that their actions will not unleash deep economic turmoil, there are
much deeper and more significant delusions on the other side of the aisle. Democrats and the President
in particular, believe that continually taking on more debt to pay existing
debt is a more responsible course of action.Even worse, they appear to
believe that debt accumulation is the equivalent of economic growth…So
even though a reduction in government borrowing and spending does help the
economy, it won't feel very helpful tomorrow. The more we borrow and spend today,
the more we will suffer tomorrow when the bills come due…We can choose to pay
now or try to pay later. But the longer we wait the steeper the bill.”Commentary at…

MARKET REPORT
Friday, the S&P finished up 0.6% to 1703 (rounded) at the close. (The down days of the last 3-weeks have been
erased in 3-days.)

VIX fell 5% to 15.72 and the fear ended quickly.

MARKET INTERNALS (NYSE DATA)

Internals were again positive on the day and the 10-day
moving average of stocks advancing climbed to 49%. (A number below 50% for the
10-day average is generally bad news for the market.)

New-highs outpaced new-lows Friday, leaving the spread
(new-hi minus new-low) at +82 (it was +82 Thursday).The 10-day moving average of change in the
spread is +11. That just means that over the last 10-days, the spread has been
getting better and we know that that’s actually all in the last 3-days.

Market Internals are neutral on the market for this short
term indicator.

NTSM

The overall long-term NTSM analysis remained HOLD at the
close.

I suggested a few days ago that I wanted to get back in
the market because, so far, I have missed the back half of this year’s
gains.With the sudden rise in the
S&P 500 (because of the debt news) the opportunity disappeared.At this point, the current NTSM system is not
yet calling a buy.The VIX needs to fall
more and the markets need to continue their advance to push the on-balance
volume higher.Sentiment is high, but
not yet high enough to block other indicators.So as frustrating as it may be, I will wait for a better opportunity.If earnings stall as many predict, being out
of the market may turn out for the best.

MY INVESTED POSITION

I remain about 20% invested in stocks as of 5 March (S&P 500
-1540).The NTSM system sold at
1575 on 16 April.(This is just another
reminder that I should follow the NTSM analysis and not act emotionally – I am
under-performing my own system by about 2%!)I have no problems leaving 20% or 30% invested.If the market is cut in half (worst case) I’d
only lose 10%-15% of my investments.It
also hedges the bet if I am wrong since I will have some invested if the market
goes up.No system is perfect.

Followers

About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.